Which parity price applies to which situation depends on which side of the transaction
you stand or whose incentives you want to consider. An importer is interested in the
import parity price and this will serve as an indicator of whether it is worth it to buy the
commodity, pay for shipping, handling and local transport costs. An exporter is interested
in the export parity price and this will serve as an indicator of whether their commodity is
competitive with the same type of commodity located in a market across the border.
Once all costs associated with moving the commodity to that foreign market are
deducted from the price at the foreign location, is there a price difference remaining?